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POLL-Australia cash rates seen at record lows well into 2019

Published 29/06/2018, 05:39 pm
© Reuters.  POLL-Australia cash rates seen at record lows well into 2019

* Open RBA poll data: reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/cb-polls?s=GCR01+2H+7&st=Menu+G+C

* RBA decision due 0430 GMT Tuesday, July 3

SYDNEY, June 29 (Reuters) - Australia's central bank is seen holding rates at record lows until next September, according to a Reuters poll, as tepid inflation and a U.S.-driven international trade war prompt analysts to move their forecasts for tightening further out to the future.

The Reserve Bank of Australia (RBA) last cut rates to 1.50 percent in August 2016 and is expected to maintain the record stretch of stable rates for yet some time.

Of the 32 economists polled, 30 forecast the RBA would stand pat at its policy meeting on July 3, with one predicting a cut.

A rise in the cash rate to 1.75 percent is not seen before the September quarter of 2019, according to a median of 30 analysts, compared with last month's poll, which predicted a hike by June.

Of the 33 analysts polled, a dozen predicted at least one hike by June 2019 versus one who predicted cuts, and as many as 20 still see no change by the RBA in that period, as inflation lingers stubbornly below the bank's 2-3 percent target band. central bank has sounded optimistic about the economy recently as a drag from the end of a decade-long mining boom draws to a close and business investment and exports pick up. All that argues against a cut.

At the same time, there is growing uncertainty around the outlook for consumer spending as the housing market slows and wage growth crawls near its slowest pace on record.

"Falling home prices in Sydney and Melbourne, tightening bank lending standards and the threat to global growth from a U.S.-driven trade war all argue against a hike," Shane Oliver, chief economist at Australia's biggest listed wealth manager, AMP Capital, said in a note.

"It makes sense for the RBA to remain on hold. We remain of the view that a rate hike is unlikely before 2020 at the earliest and can't rule out the next move being a cut."

Besides Oliver, eight other respondents including Westpac Banking Corp and Macquarie Group predict a steady outlook until the end of 2019.

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